Mobile advertising firm Kargo is set to move away from its earlier ad network model towards pure-play programmatic in a pivot that has seen it cut approximately 40 staff, plus transfer the majority of its UK workforce to Sublime Skinz.
The lay-offs took place in April, The Drum understands, with chief executive Harry Kargman explaining that the headcount, prior to the cuts, was circa-275, and that just shy of 15% had since exited the company. This was to accommodate its shift towards programmatic buying, as opposed to its managed service model.
According to Kargman, the company has since started restaffing with an emphasis on developing its programmatic skillset, as well as hiring data scientists and software engineers. The restaffing primarily will take place in the US.
Explaining the headcount reduction, he said: “It is really clear that we are moving people and resources out of the manual ad network business model, moving them toward, running high-end creative, programmatically, and automating the Kargo business."
Kargo’s new model will see it prioritizing the purchase of advertising via private marketplaces (PMP) from premium publishers with the new direction for the business also entailing a tie-up with Innovid to develop new ad units.
“The key here as we are not buying inventory on the open exchange. Kargo has directly our code into the pages of these publishers,” added Kargman.
“So the kind of issues that plagues the open Internet, such as brand safety, fraud, because we're not buying inventory on the open exchange, most of those issues don't exist on Kargo.”
In tandem with this tie-up, Kargo is also bifurcating its European operations in a move that will see some of its London office transfer to Sublime Skinz as the US-based outfit hopes to wait-out the uncertainty of the EU’s upcoming General Data Protection Regulations (GDPR).
Effective from May 25, three-quarters of Kargo’s approximately 12 London team will make the move to the France-based adtech outfit, with the remainder, led by Kargo’s senior vice president, global operations, Arthur Cole, effectively managing the relationship between the two.
This means that come May 25, Kargo will “no longer be running revenue” in Europe, with the company transferring the revenue it had earlier generated and had booked to Sublime Skinz, with Cole and co. effectively remaining to supervise the partnership.
“We will no longer directly be running revenue in Europe until such time as we have more certainty around GDPR,” confirmed Kargman.
In a statement mailed to The Drum, Andrew Buckman, Sublime Skinz, managing director, EMEA, confirmed the tie-up with Kargo and claimed that it would help advance the rollout of its M-Skinz mobile ad unit.
“During this time, our key priority will be to ensure employees and publisher and advertiser partners experience a smooth transition, with a number of Kargo staff joining the Sublime Skinz team,” he said.
“Steve Filler, senior vice president, sales, Europe, at Kargo will be fundamental in this process and will help shape the partnership going forwards," he added.
Last year, Kargo further expanded into Asia Pacific with the opening of an office in New Zealand.